Small entrepreneurs typically start business for which they have great passion for. This is especially true for some people that I know, because their pride and joy partially depend on the success and failure of these businesses.
Due to the recent crisis, a lot of these small businesses have been affected, negatively affecting their very existence. An entrepreneur has to answer the question, "Should I shell out my own personal money in order to keep this business alive?"
Apparently, a lot of small American entrepreneurs think that this is the way to go. According to a survey of 750 small business entrepreneurs from Discover Small Business Watch, 61 percent of the respondents said that they are willing to shell out their own money to lend liquidity to the business. Of this, 40 percent said that they are "very likely" to spend personal money, while 21 percent said that they are "likely" to do so.
One of my friends, who happens to be an entrepeneur himself, would also rather to take this strategy. Earlier this year, he spent his personal money to absorb losses and keep his key businesses alive. According to him, it would have been more difficult to start from scratch as compared to spending some personal money in the meantime while the business is losing capital.
I guess he does have a point. Setting up a small business is a very difficult chore. If possible, we shouldn't just let that go to waste if we can help it. There's a drawback, however. Putting money in such failing ventures may be risky for your personal finance. When using your own assets, remember to set a limit on the amount you will spend. Otherwise, you may be better off selling the business. At least this way you can still take back some of the capital you initially placed. Then you can probably decide to start anew with a new business.
